Do You Pay a Stock Trade Fee to Buy and Sell?

by Victoria Duff, studioD

Contemporary investors have a wide choice of commission fees and services from full-service brokers as well as discount and online brokers. Before May 1, 1975, when the New York Stock Exchange allowed its member firms to negotiate commissions, all firms charged the same commission fees. The mid-1990s saw a proliferation of online brokerage firms and even lower commissions. One aspect remains the same in stock trading: you pay a commission both when you buy and sell securities.

Full-Service Brokers

The commission charged by a full-service brokerage firm when you buy or sell stock is the highest because the broker not only handles the transaction but also provides investment advice and stock research. Commissions are generally figured as a percentage of the total dollar value of the trade, but fees vary from one firm to the next. Inquire how much you will be charged in commissions before you place your order.

Discount Brokers

Commissions on trades at discount brokers are about half of what full-service firms charge, largely because discount brokers offer less personalized service. You can still get stock research and limited investing advice, but you normally don't have a broker assigned to your account.

Online Brokers

Online brokers provide website access with nearly everything an investor might want in terms of stock research, trading tools and account management tools, while charging low “per-trade” prices. You are on your own, however, with regard to choosing what to buy and sell, and many services have additional subscription or use fees on top of the commission or transaction fee.

Other Fees

When you sell stock, you will see a small fee listed on the confirmation in addition to the commission. This is called the "SEC Fee," but it is not imposed directly by the SEC. Section 31 of the Securities Exchange Act of 1934 mandates that all self-regulated organizations, such as FINRA and the various stock exchanges, must pay the SEC a fee based on the total volume of their stock transactions. This fee compensates the SEC for its market regulatory and oversight activities.

About the Author

Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.

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